Consumer insights

Finance & fortune

November 7th, 2016

At 29, Annette is already a widow.  When we met her, she lived in a rented house now near a shopping centre along the main road in Vihiga.  Her in-laws were never very fond of her, and after her husband’s death they chased her off the land where the two were living.  When Annette later gave birth to a baby girl, who is now five years old, they disliked her even more.  Still, Annette managed to get the title on the land left to her by her late husband transferred to her name.  She has been hoping to sell the land.  She doesn’t want to live next to her in-laws and she doesn’t think there’s good business in that area, far from the main road.  Her dream is to sell the land and buy a plot near the road where she can build a house.  But selling the land is tough.  There aren’t many buyers from within the community, and it’s not a place where people tend to aspire to move.  It’s also tucked between the plots of her hostile in-laws.

Throughout the Diaries, she lived in this rented room with her daughter.  She sold paraffin outside the house in the evenings and sold molasses to area changaa brewers as her main business.  The brewing is illegal, so to avoid harassment from police, she needed to “register” at the chief’s office, where they expected a monthly bribe of KSh 2,000 to leave her alone.  She couldn’t afford this regularly during the Diaries and would pay the police each time she was caught.  But, after we left, she negotiated a deal with the chief’s office to pay just KSh 8,000 for the year.  This stopped the harassment of local police, but then police from other areas started coming to this area, knowing that brewing was popular and bribes plentiful.  Each time they showed up, she had to part with KSh 1,000.

The police were not her only problem.  She complained that her suppliers often let her down.  She was just a small fish, and the suppliers would take their time filling her orders.  Sometimes they would themselves be out of stock.  She wasn’t high on their priority list when molasses was available.  She would often team up with other women to buy a larger quantity of stock together, but this was also problematic.  Others would go for stock and tell her there wasn’t enough for her share.  Sometimes she would pay for others, and they wouldn’t come up with the money to pay their share.  When she did have stock, the business was profitable, returning KSh 500 in profit for every KSh 2,000 in stock.  She dreamed about having enough money to buy an entire lorry of molasses on her own.

When I want to withdraw KSh 10,000 and the agents says that only KSh 2,000 is available, I have to go to the nearest town, Kakamega, to use the ATM machine.

Catherine Wanjala, Research consultant, on the challenges of bouncing back from major shocks.

She thought perhaps her bank might help her get that money together.  She had an account at Equity Bank, where she regularly saved up for stock and cashed out to pay for it.  She normally did her transactions through an agent, but this didn’t always work the way she hoped.  Sometimes she would take money and find the agent was closed.  She would take the money home and end up spending more than she planned.  The agents didn’t always have enough cash to accommodate withdrawals.  “When I want to withdraw KSh 10,000 and the agents says that only KSh 2,000 is available, I will then have to go to the nearest town, Kakamega, to use the ATM machine.”  A trip to Kakamega cost an extra KSh 100 in matatu fare and took about two hours round trip.

In addition to her bank account, she belonged to one chama where she contributed KSh 300 per month as another way of saving.  She also had an M-PESA account, which she used mostly for sending and receiving money over distance.  For M-PESA, the agent was right outside her house, making it very accessible.  Her daughter’s father regularly sent her money on M-PESA.  Sometimes she sent money to her supplier and her brother using the service.

She and her brother helped each other as much as they could.  At one point during the Diaries, Annette sent him KSh 2,000 to help pay for his wife’s hospital bill.  Her brother was a boda boda driver and aspiring to buy his own motorbike.  Annette held onto his savings for him.  When he decided to take a loan at a microfinance institution to get the rest of the money together, she served as his guarantor.  He would also give her money on an almost daily basis to hold for him to help him save up for his monthly loan payments of KSh 8,000.  She even loaned him directly KSh 25,000.  He paid her back in a lump sum with an extra gift of KSh 5,000 to say thank you for her help.  He decided to deposit this repayment in her bank account instead of sending on M-PESA, since the withdrawal charges would be lower.

As the Diaries ended, Annette and her brother were both doing well.

But when we came back two years later, we found everything had changed.  Annette had taken all of her savings and a loan of KSh 30,000 from Equity Bank—secured against the title to her land—to buy an entire lorry-full of molasses.  For her, this was a huge investment, KSh 78,000, but she felt like this would give her enough returns to continue operating at a bigger scale, without the coordination problems of the past.  She went to buy the stock herself and rode in the lorry as it traveled back to Vihiga. But along the road, the lorry was in a terrible accident, rolling over and spilling out all of her stock.  Luckily, she was able to escape serious injury in what could have been a fatal incident.

Still, her economic life unraveled.  She had very little stock on hand to keep the business afloat and no way to expand.  Then, the owner of the space she was renting decided to sell his property, forcing her to move.  Her clients could no longer find her and business slumped further.  Around the same time, her child’s father inexplicably stopped sending money for her daughter’s upkeep.  This had never been a lot of money, but used to at least provide something small that she could count on.

She started cutting back expenses.  She moved her daughter from a private to a public school.  She stopped paying premiums for her health insurance through the National Health Insurance Fund (NHIF).  Not only was she short on money, but premiums had risen to KSh 500 per month, which pushed a number of Diaries respondents out of the programme.[1]  She moved back to her parent’s home.  When her daughter got sick, she had to look for someone who might pay her to wash clothes to get even KSh 200 to take her to the hospital.

After the accident, Annette had KSh 20,000 still in her bank account.  She thought this money might help her make some loan payments before all of her stock was sold.  She took KSh 6000 of this to buy stock of fish, hoping to get back on her feet in a product with fast turnover.  But, when she got sick, she couldn’t sell her stock.  About half of it went bad and couldn’t be sold.  What was left of her savings, she used to make some of her KSh 3,000 monthly loan payments.

When we met her, she was in despair and not doing anything to earn money.  Her savings was completely gone.  She missed her last two loan payments.  So far, she hadn’t received any communication from the bank.  One of her brothers had offered to take in her daughter for a year so Annette could try and put her life in order.  She was trying to make a plan for the future.  She was hoping to get just a little money to start a business again, but she was not sure what kind of business.  She was also looking for a cheaper room, where she could pay rent of less than KSh 400 per month.  Of course, she reminded us, “I also need to raise KSh 3,000 every month to pay the bank loan.”



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